For Mark Roberts’ Use: In the last few years before retirement, your focus might shift toward planning vacations, dreaming of new hobbies, or simply longing to be free of your alarm clock. Of course, we want to help ensure that you can actually fulfill all of these goals. So before you take the leap into retirement, make sure you can answer these four questions which assess your financial readiness.
What is your real tolerance for risk? In your earlier years, you might have been willing to take some risks in order to potentially achieve larger gains. In most cases, though, it’s better to switch to a more conservative investment strategy as you approach retirement. You no longer have twenty years to make up any losses, so protecting your principal is important now. Make sure your retirement income doesn’t hinge on returns from high-risk investments.
What is your withdrawal strategy? You know that at least part of your retirement income will be derived from withdrawals from your retirement account, but have you formulated a plan for those withdrawals? It’s important to learn how various types of withdrawals will affect your tax status. Also, consider whether your cost of living will change throughout the years, and structure your withdrawal strategy around that.
What are you going to do all day? Right now, you might like the idea of doing “nothing” all day. But most retirees grow bored of that, believe it or not! You’re accustomed to structured days, and you might actually become bored or depressed unless you plan for activities to replace work.
Have you established an estate plan? Hopefully you’ll enjoy your nest egg for years to come. But what would happen to it, if you pass away prematurely? Having a large sum of money means you also need a plan for that money. Before retiring, meet with an estate planning attorney to craft a plan for your assets.
Of course, we can help with most of these issues. Schedule an appointment with us before you reach retirement so we can help you determine whether you’re really ready.